Tag Archives: foreclosure

It seems like we get a lot of questions lately from home buyers, or folks just calling in asking about a particular listing, but the one question I bet gets asked more than half the time is “is this house a foreclosure?”

The list is tied to the Multiple Listing Service for the New River Valley Association of Realtors, and brings in anything listed as “lender-owned” or “bank-owned”. It’s as comprehensive as we can make it, but depends on accurate data entry when the property is listed.

Feel free to poke around and see what catches your eye. If I can help, you know how to find me.

If you want to search traditional resales throughout the New River Valley, you can do that at NRVLiving.com/Search.

I read a question, posted online, recently, where a buyer said that they were looking at making a cash offer on a bank-owned foreclosure. Specifically, they were wondering whether a bank would take a cash offer for less than the listed price. For the purposes of this post, let’s assume that they mean “will the bank take far less than the asking price if I’m paying in cash?“

The answer is that the bank might … or they might not. I’ve seen competing situations where sellers have taken less money for cash offers, and I’ve seen other situations where an offer with a financing contingency eventually won because other terms made it more attractive. So the short answer is no one knows. The long answer is that if you’re making a cash offer on a foreclosure (also considered an REO (Real Estate Owned) or bank property), consider:

your source of funds – every bank will require proof that the money, the cash, is available to you. This could be as simple as a letter from your bank stating that you have a line of credit of $X available to you, or it could be as complicated as notarized copies of the fund accounts from which the money will be pulled. Every REO is different, and so you – and your agent – will need to know that information before submitting an offer.

inspections – most banks will not allow repairs to be made as a result of inspections, but do not let this stop you from doing a home inspection! As a buyer, you have a right to do the inspections you need to do in order to be satisfied with the purchase, but since the bank has never lived in the house (and if they’re being foreclosed on their own property you probably don’t want to be doing business with them anyway!), they can’t/won’t disclose potential problems and make sufficient repairs. You’re still entitled to the inspection, if you so choose, but the bank isn’t required to make repairs, so factor that in to the equation when making your offer. In order to be successful, the intent and timeframe of any such inspections should be clear and reasonably swift.

the closing date – your closing date is also important, obviously, because it tells the bank how long they’ll need to “carry” the home and any related expenses. Most cash offers can close quickly, even in two weeks or less, but be sure to leave yourself enough time to allow everything (deed transfer, document preparation, etc.) to happen.

Does cash get you in the game? Absolutely. But it’s not the only thing you’ll need to be successful.

Next week, I’ll be listing a house in Christiansburg. That’s the good news. The bad news is that just a few doors down, there’s a short sale.

I wanted my clients to see the floor plan of this particular house because it’s a little different than many of the others on the street, and so we took a little walk to look around. As we were in the house, I mentioned that the property was a short sale, and asked if they knew what that meant. Blank stares.

Not much has been posted on this blog about short sales because, well truthfully, we just haven’t seen too many of them. There was this post, “What Is A Short Sale, Really?“, but that’s really about it. I sense that short sales will become more prevalent here in the New River Valley though, as our real estate trends tend to be a bit behind many of the larger metropolitan areas – here’s to hoping I’m wrong, but if that’s the case than it’s likely we’ll see a rise of them in the next year or so. But back to the story …

A short sale is simply when a homeowner owes more to the lender than their home is worth. It’s an unfortunate scenario, but one that is pretty common in a lot of areas. The impact of a short sale to a homeowners’ credit is often less of a hit than that of a foreclosure, but nevertheless it’s a tough pill to swallow. And the impact on surrounding properties can also be tough to deal with, as well, as homes sold “short” will often drag down comparable home values. A short sale isn’t always a lender’s first preference, but when it comes to choosing to foreclose – and then having to put a foreclosed property on the market – versus getting some kind of value for the property, I suspect most lenders will choose to at least explore a short sale with the borrower.

But a short sale isn’t for everyone. As the borrower, you’ll need to prove to the lender that you can’t afford to continue making payments – this is done through what’s called a hardship letter, and in this letter you’ll need to explain – with verification – exactly why the payments are not being made. Once the lender has agreed to allow the home to be sold short, the house can be put under contract … but it doesn’t get any easier. There are any number of moving targets that need to be met, and as a homeowner you should know that not every short sale that goes under contract successfully makes it to the closing table.

The long and short of a short sale is this – it can be done, but it’s not easy, and it’s not foolproof. At some point, because the bank is the one making the final decision on whether to accept less than what is owed, the decision-making is taken out of your hands; if you’re not comfortable with the uncertainty of that, a short sale may not be right for you. And an agent who knows their way around a short sale is a must.

If you think you might need to address the possibility of a short sale with your lender, contact me and let’s talk. There may be other ways of handling it, but even if there aren’t, we can get you through it.

Updated 2/2/10 2:10pm – Danilo Bogdanovic just posted a good addition to this post, entitled “How Long Do Short Sales Take?“. If anyone would know it’d be an agent in the 51st state, Northern Virginia.

I was asked recently about short sales, and while I could give the quick and dirty explanation, that was about the extent of my expertise. The quick and dirty?

A short sale occurs when the lender agrees to let the borrower sell the house for less money than what is owed on the loan.

I’ve only been a part of one short sale transaction, and so my experience with them is limited. And, thankfully, we haven’t seen many of them in the Blacksburg-Christiansburg area. Yet despite my lack of experience with them, I knew just who to call … my friend, Sarah Stelmok. Sarah is an associate broker in Fredericksburg, VA, and knows a LOT about the short sale and foreclosure process. Seriously. And if she doesn’t know what she’s talking about, then she ought to be an actress because she has me fooled. So I sent her an email and within minutes had a response from her, which she has generously allowed me to repost. If you’re a homeowner and facing foreclosure, consider a short sale and the following steps in order to minimize the damage. Each bank is a little different, so your agent should be in touch with the bank immediately in order to begin assembling the necessary steps.

1. Third Party Authorization – this letter will give the real estate agent permission to talk to the bank and the bank to talk to the real estate agent. It needs to be agent and loan # specific and have an indefinite end date. Some banks have their own forms they want you to use. This is another good reason to contact the bank ASAP.2. List Property – Some banks want the property listed for the amount that is owed first, and they will be willing to drop to a more realistic price after a period of time. The listing agent will need to back up their list price with a good CMA! Remember, a BPO will be called out as soon as they receive a contract.3. Get Contract – needs to be ratified by seller and buyer. Some banks want one contract at a time; others want to see them as they come in. Another reason to contact the bank ASAP.4. Send Contract to Bank5. You will also need to send – two years of W2s, the most current profit/loss form, listing agreement, a preliminary HUD-1 specific to the contract that you are sending, last 2 bank statements, and a hardship letter. They may also ask for proof of disability or being laid off, if applicable, and/or proof of other assets. Some banks ask for a little more info, but they will let you know when you call.6. Be persistent, but patient – Make sure you ask how long it will take for a contract to work its way through the system. You want to hear it will take 30-45 days. You also want to ask about the likelihood the loan will be sold. They like to sell the loans right before they give you approval, and you’ll have to start the process all over if they do.7. Stay as current as possible – Make sure you don’t get more than 2 months behind. Some banks will allow you to get up to 9 months behind, but they are harder to negotiate and keep off the auction block.

These steps will need to be done for each bank that is involved and each bank has their own process.

From the things I hear from colleagues who work in other areas of Virginia, the short sale and foreclosure process is an ever-changing experience, and I’m learning as much as I can about it. My thanks to Sarah for sharing this, you can find out more about short sales on her blog, SarahiouslySpeaking.com. And if you’re in danger of falling behind on your mortgage, email me and let’s see what can be done about it.

First, the size of the sign was shocking, but then when I looked at it further I realized I had never seen one of
these in town before … at least, not since I started in real estate nearly five years ago. Has the foreclosure wave finally hit Blacksburg?

I doubt it.

We’ve seen foreclosures in other areas of the New River Valley, and it’s not necessarily an unusual occurrence. Why won’t this home sell?

4 bedrooms, 3 baths, 2304 square feet

built in 2000

hardwood and tile floors

gas fireplace

full walkout basement

Mountain views

I don’t have the answer about why the home hasn’t sold. When it was listed, it was listed for $350000.
That’s not a bad price, and I listed and sold the house directly across the street for $355000. Seems like a good value, what’s the problem? But if you’re interested in taking a look, let me know and we’ll go together.

First, the size of the sign was shocking, but then when I looked at it further I realized I had never seen one of
these in town before … at least, not since I started in real estate nearly five years ago. Has the foreclosure wave finally hit Blacksburg?

I doubt it.

We’ve seen foreclosures in other areas of the New River Valley, and it’s not necessarily an unusual occurrence. Why won’t this home sell?

4 bedrooms, 3 baths, 2304 square feet

built in 2000

hardwood and tile floors

gas fireplace

full walkout basement

Mountain views

I don’t have the answer about why the home hasn’t sold. When it was listed, it was listed for $350000.
That’s not a bad price, and I listed and sold the house directly across the street for $355000. Seems like a good value, what’s the problem? But if you’re interested in taking a look, let me know and we’ll go together.

The data relating to real estate on this website comes in part from the Broker Reciprocity/IDX (Internet Data Exchange) Program of the New River Valley Multiple Listing Service, Inc. Real estate listings held by brokerage firms other than Nest Realty are marked with the Broker Reciprocity logo (IDX) and detailed information about them includes the name of the broker.